Week of January 16th, 2023

Econ Extra Credit newsletter #134

It’s based on the principle of fairness — within limits.

Plus, all things Mountain Dew.

Traditionally, workers in parts of Asia travel during the holiday to spend time with family. Here’s how COVID has changed that part of the supply chain.

A slowdown in immigration to the U.S. has helped fuel the labor shortage and inflation. Plus, COVID-19 changed how Lunar New Year affects supply chains.

Immigrants have accounted for a major share of labor force growth for years, increasing production, which keeps inflation lower, experts say.

When people have to spend more and more on rent, there’s not much left over for other essentials.

The vehicles have struggled to gain traction, but school districts are being swayed by new funding options, as well as environmental and health concerns.

A big swing in the housing market occurred over the last year: for the vast majority of people, it’s now cheaper to rent a place than to own it. According to a new report, that’s in big part due to rising mortgage rates, which have risen in tandem with the Fed’s rate hikes. Netflix’s CEO, Reed Hastings, is stepping down — he helped transform the company from a mail-order DVD service to a streaming behemoth. Christopher Low helps break down what’s behind the recent strength of bond yields. And, the Sundance Film Festival is back in person after two years of being virtual because of the pandemic. 

The majority of films debuting at Sundance are still in need of wide distribution. Some believe having the festival in person for the first time since 2020 will help.

A new report from ATTOM says it’s now cheaper to rent than own a place in most parts of the country.

Harvard Medical School, one of the top in the country, will stop submitting data to the U.S. News and World Report college ranking system. It’s another blow for the rankings, which has recently come under criticism from a number of high-profile schools for alleged flaws in the methodology. Alphabet, the parent company of Google, announced that it would lay off 12,000 workers, making it the latest tech giant to announce job cuts. And, the high-flying Davos summit wraps up today amid a mix of optimism and caution for coming year. 

The mood at the World Economic Forum was warmed by optimism about the global economy, says The Economist’s Patrick Foulis.

From the BBC World Service: The fight over a controversial coal mine in Germany isn’t over according to one of the country’s best-known climate activists Luisa Neubauer. She tells us how mining cannot be justified, even in the context of an energy crisis in Europe triggered by Russia’s war with Ukraine. Plus, the demise of British Volt, once the UK’s great hope for the future of the auto industry. And millions are on the move in Asia for the Lunar New Year.

Art generated by artificial intelligence has gone viral recently, with the help of human art on the internet. As the technology expands, some artists are sounding the alarm about what they call unethical practices.

Plus, lizards and pooper scoopers.

That question will be top of mind at the Federal Reserve’s next meeting on Feb. 1. Plus, where did the debt ceiling come from?

High helium prices, driven by shortages, played a role in Party City’s bankruptcy. Here’s what it means for businesses that rely on balloons.

Harvard Med joins a number of prestigious schools boycotting the rankings, saying education is too complex to be ranked numerically.

We don’t yet know if the Fed’s rate hikes have fully shown up in the economy. That could take many months.

Over the past decade, esports have grown to a point where events sell out NBA stadiums. But as popularity has boomed, esports leagues still face major business barriers.

Inventory loss “could have been a lot worse,” said Johanna Dominguez of Put a Plant on It. But merchants suffered as shoppers stayed home.

The U.S. government hit its debt ceiling Thursday and must raise the debt limit to avoid defaulting. How did we get here?

There’s more bad news out this morning for the embattled housing sector. Housing starts, the metric used to measure the number of new homes being constructed in the U.S., fell for a fourth consecutive month. KPMG Chief Economist Diane Swonk helps us break down what the data means for the wider economy. And, Treasury Janet Yellen said that her department would take “extraordinary measures” to keep the U.S. government paying its debts as Congress mulls increasing the debt ceiling. And, a story about how a $30 million philanthropic donation to start an Illinois addiction treatment center played out when staffers had to actually run the place.

Basically, Treasury will have to move money around so it can keep paying the country’s most important bills. At least for a little while longer.

The money was a one-time gift for infrastructure, but to stay running, the clinic is on its own.

It’s estimated that the U.S. government will hit the Congressionally-mandated debt ceiling today, meaning it will have to find ways to shuffle funds around until Congress raises the limit. Lawmakers are gearing up for a protracted fight on Capitol Hill. Recent data from the Federal Reserve Bank of New York show that inflation is hitting low-income households, especially those that are Black and Latino, the hardest. And, amid unease following the collapse of FTX, crypto miners are being squeezed by high energy costs and lower prices for cryptocurrencies. 

From the BBC World Service: France faces a day of national strikes as President Macron’s retirement reforms divide the country. The plans, which include pushing the country’s retirement age up to 64, are facing major pushback from unions. Also, how carbon can be captured from the atmosphere. And, Pakistan’s former president thinks he can solve the country’s economic crisis.

3D printing can potentially be a faster and cheaper method of building homes. But it may require more than technology to take these dwellings mainstream.

Let’s weigh the pros and cons.

A lot of investors were betting that the Bank of Japan would join other central banks in hiking rates to beat back inflation.

The owner of a North Carolina toy shop talks about the state of her business after the holiday retail season.

Girl Security is working to change perceptions of the field and encouraging women to bring their valuable experiences to the space.

How heavily are the odds stacked against startups without the “massive leg up” of family wealth?

A recent New York Fed report finds that households in these demographics have experienced higher-than-average rates of inflation.

Hundreds of businesses rely on major commercial and arts gatherings for much of their annual income.

Black and Latino families spend more of their budgets on the necessities, like food and housing. Plus, a nonprofit aims to place women in national security roles.

Consumers seemingly couldn’t buy enough cars during the peak of the pandemic, but recent data shows that the auto industry saw widespread declines in vehicle sales last year. We delve into what drove the decline and what car sellers are doing to adjust. Lower vehicle sales also contributed to an overall decline in retail sales in December — a good sign for investors, says Susan Schmidt. But that may not be the case for others — we checked in with a number of small businesses to see how they’re faring. And, the BBC’s Ruth Alexander reports on the global rise in egg prices. 

Electric vehicle sales are up, but is demand for cars overall taking a dip?

How did this holiday season go? A few entrepreneurs weigh in.

A growing proportion of the housing market is being taken over by millennials, according to new data.

A big change in the housing market is happening — young people aged 25 to 34 are making up a bigger and bigger proportion of homeowners. A new analysis from Harvard’s Joint Center for Housing Studies says millennials, a group that has traditionally faced difficulties with high home prices, are making inroads as they age and start families. Global demand for oil will reach a new record this year, according to the International Energy Agency. And, the Bank of Japan again declined to raise interest rates, bucking expectations and continuing the country’s policy of ultra-loose monetary policy that has kept rates near zero for years. 

From the BBC World Service: Global inflation seems to be easing – but there’s still no quick fix. The latest data from Europe suggests the worst of the inflation pain might be over for now. We hear from consumers and businesses in the UK where prices are still high, and we take a look at Japan’s unique approach to rising prices. Plus, Elon Musk changed Twitter’s blue tick system and now an unlikely party has been taking advantage – Afghanistan’s Taliban.

An explainer on the World Trade Organization and why it matters.

As consumers rein in purchases, how will they spend, and how will businesses respond? Plus, freelancers welcome a delayed tax-reporting rule.

Peer-to-peer apps have become a lifeline for small businesses. But many formerly under-the-table cash transactions now leave a digital trail. 

Here’s how one small business is adapting to the changing consumer climate.

A New York Fed survey shows consumers are cutting back. But inflation means they’re paying more for the same stuff.

A surge in the number of early retirees threatens to prolong inflation in the U.K.

“I don’t know what this year is going to bring,” said one experienced Montana agent.

When we focus on recent months rather than year-on-year increases, inflation numbers look pretty good, says economist Alan Blinder.

Fresh economic data from the Chinese government paints a picture of a rapidly slowing — and aging — economy. The world’s second-largest economy reported just 3 percent GDP growth in the fourth quarter, a number that’s the lowest in decades besides the first year of the pandemic. And, this week’s World Economic Forum summit in Davos, Switzerland is underway and tackling global issues in an age of increasing fractiousness among world powers. 

Zanny Minton Beddoes, editor of The Economist, says the World Economic Forum’s elite attendees will talk far-ranging issues like climate and inflation.

Analysts say the world’s largest retailer is growing its footprint in services as it seeks new sources of revenue.

The annual meeting of the World Economic Forum kicked off this week in Davos, Switzerland, bringing together a collection of the world’s most powerful people to discuss a range of global issues. On the agenda for participants will be problems like climate change, geopolitical fragmentation, and even a question of the summit’s own relevance. Zanny Minton Beddoes, the Editor-in-chief of The Economist, gives her view on the ground in Davos. Electric vehicle sales accounted for 10 percent of all new global car sales in 2022, another indication of the EV industry’s meteoric rise. And, Walmart and Salesforce announced a partnership to improve deliveries and other logistical aspects of the retail giant’s business. 

From the BBC World Service: Chinese officials say the country has entered an “era of negative population growth”. We examine what a decreasing workforce and a growing elderly population means for China’s economic future. Meanwhile India is guzzling Russian oil at a record rate.  Plus, we ask why is the cost of a box of eggs soaring around the world?

There are long-term benefits to using electric induction stoves, but also upfront costs for consumers and challenges for the grid.

The number of strikes rose nearly 50% in the last two years. We explain why. Plus, the rich got richer, and authentic Native designs take on knockoffs.

Two-thirds of the $42 trillion in new wealth went to the wealthiest 1%, says a new report from Oxfam. The group also says tax policy can change that.

Emily Stewart of Vox explains how web tactics like countdown clocks and inventory trackers can create a false sense of urgency for consumers.

In Juneau, Rico and Crystal Worl draw from their Tlingit and Athabascan heritage to create designs for everyday items like playing cards.

Cornell University counted almost 400 strikes last year, following decades of declining union membership. Here’s why labor action is becoming more common.

It’s that time of the year again: earnings season. Publicly traded companies across the economy are reporting their fourth-quarter results, and they so far portray a mixed picture of the economy. Michael Hewson, Chief Market Analyst at the London-based CMC Markets, tells us what he’s looking at, including reports from banks and Netflix. Bank earnings that have come out so far have shown increased caution at those financial institutions, which boosted their rainy day reserves in anticipation of increased financial malaise. And, what the CEO of energy giant Equinor has to say about the future of household energy. 

Wages aren’t keeping up with increasing prices, according to new data on wage growth. That’s meaning economic hardship across the board, especially in low-income households that have costs for essentials skyrocket. That disparity between wages and prices is also affecting workers of color more, due to having lower savings rates and fewer liquid assets on average. And, Mexico has passed a new ban on smoking in all public places. 

From the BBC World Service: The boss of one of the world’s biggest energy firms, Equinor, is warning households not to expect energy bills to return to pre-pandemic prices. Anders Opedal was speaking to the BBC as he headed to the World Economic Forum in Davos, which starts today. Meanwhile Mexico has banned smoking in all public places, giving it some of the toughest rules in the world. Plus there are complaints about price rises in Croatia, just over two weeks after it adopted the Euro as currency.

The average paycheck lagged behind inflation in 2022, and the higher prices are hitting low-wage workers the hardest.

The nonprofit Opportunity@Work uses objective artificial intelligence in its hiring platform. The system gets tested regularly for bias patterns.